In two items about today's report on economic growth from the federal government's Bureau of Economic Analysis today, Martin Crutsinger claimed that today's lower-than-expected annualized growth of 2.8% during the fourth quarter of 2011 (vs. expectations of 3% or higher) was hurt because of big "cuts" in government spending, especially federal spending -- supposedly the biggest cuts in 40 years. I guess the underlying message is supposed to be that Congress shouldn't try to reduce federal programs any more, because already they're allegedly being cut at historic rates.
Baloney. Crutsinger was either being incredibly ignorant by assuming that all government spending is part of GDP (it's not; only government purchases of goods and services are components of GDP), or he deliberately deceived his readers. At the federal level, purchases of goods and services and "investment" are only about 30% of all government spending. Total spending has hardly gone down at all. Here are the relevant paragraphs from his two reports:
It's more than a little annoying to read a news report containing incomplete information. The irritation level hits the red zone when you realize that the writer is not only concealing important data, but telling you what you're supposed to think about what little he deigned to tell you.
Such was the case with Martin Crutsinger's Associated Press item about the Consumer Credit report issued today by the Federal Reserve. Crutsinger only told us how much debt levels increased without bothering to tell us what those debt levels are -- something a similar AP item in 2004 at the same point in a presidential reelection cycle was eager to disclose. Additionally, Crutsinger framed today's reported expansion as good news while Eileen Alt Powell's January 6, 2004 report framed expanding credit as dangerous. First, several paragraphs from Crutsinger's report (boots-on alert: it gets really, really deep):
Yesterday at my home blog, in the wake of Uncle Sam's reduction of third-quarter growth in gross domestic product (GDP) from an annualized 2.0% to 1.8%, I predicted that the establishment press's reaction would be the following: “Yeah, but the fourth quarter will be 3% or more. It really, really will be. Please believe us.”
Martin Crutsinger at the Associated Press made that easy prediction come true 48 minutes after the report was released. He and the rest of the establishment press also missed something far bigger, namely that yesterday's small GDP reduction brought its private-sector component back to a level below where it was at the beginning of the recession, no matter how you define that beginning. Excerpts follow the jump:
Uncle Sam's Monthly Treasury Statement for November came out yesterday. The results: Tax collections through two months of the fiscal year are up 4.4% over fiscal 2010; spending is down 5.5%, but only because about $31 billion in checks which would ordinarily have gone out on October 1 (a Saturday) were sent on September 30; and the deficit of $235 billion is $55 billion less than last year.
The headline in the report by Martin Crutsinger of the Associated Press, aka the Administration's Press ("Gov't on pace to run budget deficit below $1T"), celebrated the totally untenable claim, only two months into the year, that the deficit might come in below $1 trillion for the first time in four years. Crutsinger's coverage was otherwise adequate, except near the end, when he threw in the following obviously gratuitous and recklessly false and misleading statement: "A decade ago, the government was running surpluses and trillion-dollar deficits seemed unimaginable."
At the Washington Post's "with Bloomberg" Business section, the self-described locale "Where Washington and Business Intersect," a Wednesday item by Neil Irwin ("Fed downgrades growth forecasts, sees high unemployment for years ahead") told us that "The Federal Reserve sharply downgraded its projections for the U.S. economy," but never cited any projected growth numbers. Seriously.
Having learned what they are for 2011 and 2012 in the seventh and eighth paragraphs at an Associated Press item (well, at least they got to it, though it probably won't make it into many broadcasts of AP's content because of its placement), it's understandable why staunch defenders of Team Obama would resist doing so. After the jump, I'll take out the mystery by getting to the AP's numbers first:
What if I told you that the government put out a report today which would lead one to infer that the economy might barely have grown last year, and that it even may have contracted -- and that the reporter who appears to have been the only one who covered it didn't grasp its potential significance (or, conceivably, chose to ignore it)?
Today the Department of Labor's Bureau of Labor Statistics released its annual "Consumer Expenditures Survey" for 2010. As of 8:30 p.m., a Google News search on "consumer expenditures government" (not in quotes, past 24 hours, sorted by date, with duplicates) returned 72 items (the first page says over 2,400, but it's really only 72). All relevant results represent Associated Press reports filed by Marting Crutsinger (Yahoo Finance version here).
Here are the key paragraphs from Crutsinger's report which gave away the problem -- or at least should have, if the AP reporter had made one obvious comparison:
Sometimes, I think that we wouldn't have a useful press at all if it weren't for the British press.
The big news out of the International Monetary Fund this weekend was, as reported by the UK Telegraph, that it "may need billions in extra funding." Specifically, it "may have to tap its members – including Britain – for billions of pounds of extra funding to stem the European debt crisis."
In other words, the IMF doesn't have enough money to address the potential problems it sees on its own:
The August Monthly Treasury Statement released by the government today reveals that Uncle Sam ran a $134.2 billion deficit in August. That figure was $44.7 billion, or 48%, higher than the $90.5 billion deficit seen in August 2010. The year-over-year deficit increase occurred because outlays increased by 19% to over $303 billion, while receipts went up by 3% to $169 billion.
Gee, that wasn't difficult to express, was it? But it was apparently too difficult for the Associated Press's Martin Crutsinger to communicate to his readers. Of the eight figures and percentages noted in the opening paragraph, only one -- the August 2011 deficit -- appears in his report.
The next time I plan to escape reality for an extended time, I won't go to the trouble of forwarding the phones to voicemail and swearing off the Internet and TV for a few days. I'll just take whatever the Associated Press's Martin Crutsinger must be consuming.
Crutsinger's 11:45 report this morning claims that "The better-than-expected retail sales report is the second strong signal on the economy in as many days." Strike 1: It was far from unanimously considered better than expected. Strike 2: It wasn't that strong regardless, considering that it was likely achieved on borrowed money. Strike 3: The report that he thinks was strong yesterday wasn't strong either. You're out, bud. Oh, and there's Strike 4 in reserve: Though he referred to consumers being "a little more confident," Crutsinger "somehow" ignored (and AP on the whole almost completely ignored) a devastating report showing consumer sentiment at a three-decade low released well before the time stamp of his report.
At the Associated Press, the task of reporting on the official results of Uncle Sam's June Monthly Treasury Statement fell to Christopher Rugaber instead Marty Crutsinger.
Next time, Chris, tell us what happened in the month you're covering instead of going almost exclusively with the federal government's year-to-date results.
If Rugaber had looked more closely at June, he would have had to relay not particularly pleasant news -- or maybe he did look at June, and decided that we didn't need to know anything more than what the deficit was (possible motivation will be identified later). Although the deficit came in lower ($43 billion vs. $68 billion), the AP reporter "somehow" forgot to tell readers that receipts trailed June of 2010, indicating that whatever economic recovery has occurred is well on its way towards fizzling.
When the Associated Press's Paul Wiseman and Martin Crutsinger team up for a report on the economy, there's no limit to the comic potential.
Today, in covering what the folks at Zero Hedge described as "Ben Bernanke's 'I Have No Idea Why The Economy Will Get Better But It Will' Speech" (transcript is at link), the AP pair may have set a new world record for most unused words one would expect to be employed in a report on the condition of the economy.
Readers will not find the following words, all of which bear at least somewhat on why the economy is currently failing to live up to expectations and to meaningfully rebound nearly two years after the official end of the recession, in the wire service's report:
Martin Crutsinger's Wednesday, May 11 coverage of that day's release of Uncle Sam's April 2011 Monthly Treasury Statement was such a train wreck that I had to turn away before I could get through it, hoping against hope that if I came back a few days later it wouldn't seem so bad. Of course I was wrong.
How was Marty Crutisinger's report erroneous, incomplete, misleading, and from all appearances politically-driven? Let me count just some of the ways, as I go through selected segments from his report:
In a business that is supposed to treat record achievements, dubious or otherwise, as news, it's more than a little curious to note that the Associated Press's Martin Crutsinger, along with Reuters and AFP, all "somehow" forgot to tell readers that March's reported federal outlays, as seen in the Monthly Treasury Statement released today, came in at an all-time record of $339.047 billion, and that this year's spending through six months of $1.849 trillion -- also an all-time record -- is 3.5% higher than last year's comparable figure of $1.786 trillion ($1.671 trillion plus a non-cash credit of $115 billion explained here last year).
This year's six-month spending total annualizes out to $3.7 trillion, an amount that is almost $1 trillion, or 36%, higher than fiscal 2007. Though spending is the self-evident real problem, frontline reporters and their bosses would apparently prefer that news consumers not see how ugly those numbers really are.
On Wednesday, with a bit of an assist from the Census Bureau's seasonalizers, the Associated Press's Derek Kravitz, with the help of Martin Crutsinger, covered the Bureau's just-published January data on housing starts and building permits. Though no one could accuse the AP pair of excessive cheerleading, they missed the most important comparison: How did January 2011 compare to January 2010? The answer: It was worse.
Sadly, one could write a term paper identifying and correcting the clever misstatements and obfuscations contained in Martin Crutsinger's Sunday report (since updated; original is still present here) for the Associated Press on the impending submission of the President's 2012 budget by the White House's Office of Management and Budget.
Lacking such space, I'll concentrate on what I believe are the two worst examples, both of which are present in his opening paragraph. Crutsinger significantly misleads about the total spending the administration is proposing for fiscal 2012, and fails to call a tax increase by its proper name, i.e., a tax increase.
At several points in 2010 (just one example: at NewsBusters; at BizzyBlog; graphic), I pointed out that despite the federal government's continued insistence that its budget deficit for fiscal 2010 was on track to come in lower than fiscal 2009, the deficit based on real spending would be, and turned out to be, higher in fiscal 2010. That's important to know, as clever year-crossing accounting entries can't change the fact that Uncle Sam's financial situation continues to worsen at an accelerating rate. Don't expect the establishment press to acknowledge this; the illusion of improvement is important to getting their propped-up president another four years.
Similarly, it may be futile to expect that establishment media outlets, especially the Associated Press, will ever report that 2010 was the worst yearby far in new home construction since World War II. That this is indeed the case was shown last month (at NewsBusters; at BizzyBlog). This post will use December 2010 data, most of which is now in, to add an exclamation point.
Yesterday, the AP's Winston Smith-like headline writers tried to pass off 2010 as bad, but not as bad as 2009. As is the case with the government's annual budget deficit, the AP's persistent prevarication in the face of drop-dead obvious facts is an attempt to make readers, listeners and viewers believe that as bad as things are, they're at least improving (with implication, of course, that our poor, put-upon president is making progress cleaning up what was supposedly George Bush's mess). Things are not getting better, and Martin Crutsinger's narrative in the related article stops just short of saying so.
In its reports about the U.S. homebuilding industry and new home sales, the Associated Press has gotten lazy and/or deliberately deceptive. In doing so, it is giving readers, listeners and viewers at its subscribing outlets a completely incorrect impression that the industry and market are getting off the mat after recently being in their worst shape, in their words, "in 47 years." After identifying offending examples, I will demonstrate that industry activity and sales during 2010 have been almost undoubtedly at their lowest levels since World War II.
The following items, all from Thursday, demonstrate AP's concerted attempt to limit the damage to "47 years" ago.
How can you cover a story about Uncle Sam's November Monthly Treasury Statement and the proposed Obama-GOP compromise on taxes and unemployment benefits without using the words "spending," "receipts," any form of "collect," or "unemployment"? It's a neat trick, but the Associated Press's Martin Crutsinger pulled it off in his Friday afternoon dispatch shortly after the government report's release.
Instead of communicating apparently boring facts, Crutsinger concentrated his fire on the "tax-cut agreement" with a supposed "cost (of) $855 billion over two years" worked out by President Obama and Congressional Republicans. In doing so, he "somehow" failed to mention that the proposal includes a 13-month extension of unemployment benefits.
Based on a comparison to this detailed analysis at the Hill, which reported yesterday that the proposal's "cost" is really $857 billion over 10 years, Crutsinger's two-year, $855 billion "cost" assertion, which does not include a detailed breakdown, appears to be wildly inaccurate.
There are many annoying aspects of the sea change in media coverage of the economy since Barack Obama became president. At or near the top of the list is how the business press has downplayed the unprecedented housing industry disaster, while lowering the bar that will supposedly represent a real recovery to ridiculous levels.
According the the Census Bureau (12-page PDF), 23,000 new homes were sold nationwide in October. That figure ties August 2010 and December 1966 (when the population was 35% smaller) for is the lowest single month since records have been kept. More extensive evidence of how bad things are will come after the jump.
On Wednesday, the Associated Press's Martin Crutsinger provided as good an example as any of the press template for housing coverage -- acknowledge that, yes, things are really bad; give readers an absurdly low benchmark for what would represent real improvement and how long it should take to get there; locate some "expert" to say it's really not all that bad; and find some kind of anecdote somewhere, anywhere, that will leave the impression that things might somehow be getting better:
Gosh, what's a bigger story -- that to the extent it was ever happening at all the housing recovery "seems to have been aborted," or that according to the government there was very little inflation in October?
I tried to find a nicer way to put it in the headline. But I can't.
At the Associated Press, Economics Writer Martin Crutsinger's apparent plug-and-play report less than an hour after the issuance of Uncle Sam's August Monthly Treasury Statement on Monday (his item is time-stamped at 2:56 p.m., which follows the Treasury Department's 2:00 p.m. release by less than an hour) contains three obviously false statements that a news organization which really subscribes to its own "Statement of News Values and Principles" would retract and/or correct.
The specific AP standard in question is whether it has violated its promise not to "knowingly introduce false information into material intended for publication or broadcast." The only conceivable excuse at this point is that Crutsinger and his employer don't realize what they have done. The three falsehoods involved are not arcane or open to interpretation. Rather, they are significant, obvious, irrefutable, and in need of correction.
What follows are the three statements, the first of which contradicts itself in the report's own subsequent sentence:
Here's how the Associated Press's Martin Crutsinger and Daniel Wagner reported the housing portion of their Tuesday report on the day's economic news ("Factories aid bumpy recovery, housing still weak"):
Single-family home construction, which represented nearly 80 percent of the market, fell 4.2 percent. And requests for building permits, considered a good sign of future activity, slid 3.1 percent.
... The July increase in housing construction pushed total activity to a seasonally adjusted annual rate of 546,000 units. Building activity in June was weaker than first reported. It fell 8.7 percent to an annual rate of 537,000 units, the slowest pace since October of last year.
"The bad news is that activity is likely to remain depressed for several years," said Paul Ashworth, senior U.S. economist at Capital Economics. "The good news, however, is that housing is so depressed it is hard to see activity falling much further from such a severely depressed level."
Well, okay, but the situation is already closer to a zero-out than it is to the levels we were seeing just a few years ago--or any time in the 50-plus years such records have been kept. Looking at the raw data on a historical basis, one finds that July 2010 was the worst July on record for the both stats the AP pair cited:
There are two different ways of defining a recession. The Associated Press is using one of them to define its beginning, and the other to define its end. Using the former makes George Bush look bad; using the latter makes Barack Obama look good. Imagine that.
The traditional definition of "recession," which is used as the official metric in the vast majority of countries around the world, is that it is "a decline in Gross Domestic Product (GDP) for two or more consecutive quarters." Using that metric, the U.S. recession began in July 2008, the first month of the first quarter during which economy contracted, and ended in June 2009, the last month of the final of four consecutive quarters of contraction. Positive economic growth resumed during the third quarter of 2009.
The other definition of "recession" is "a period of economic contraction as defined by the National Bureau of Economic Research (NBER)." For reasons I'll never understand, but which I believe have their origins in political considerations, the government ceded the "official" definition of "recession" to the NBER several decades ago, moving this metric from the purely objective realm to the clearly subjective.
It's bad enough the federal government's official budget deficit has topped $1 trillion for the second year in a row, according to the just-released June 2010 Monthly Treasury Statement. But, focusing only on receipts for the moment, a closer look makes it obvious that the situation is even worse than it appears. Don't expect the establishment press to take any interest in the annoying but revealing details that follow.
Here is what Martin Crutsinger of the Associated Press wrote about federal collections in his Tuesday report on Uncle Sam's current month and fiscal year deficit:
Through the first nine months of the current budget year, government revenues have totaled $1.6 trillion, up 0.5 percent from the same period a year ago.
It seems that when they saw today's today's disappointing unemployment claims report from Uncle Sam, the Associated Press's Alan Zibel, perhaps with the help of contributors Jeannine Aversa, Martin Crutsinger, and Tali Arbel, decided to start playing the expectations game with June's Employment Situation Report, which isn't due to arrive from the Bureau of Labor Statistics until July 2.
If so, from a propagandist's perspective, it's a pretty slick strategy, given that the BLS's report will probably be the last significant piece of economic news before the July 4 weekend, making it a larger than usual topic of conversation among the American people in the days that follow.
Private sector job growth shrank to a seasonally adjusted 20,000 in May. Maybe if the AP and others make us think that June will go negative and the actual result comes in barely positive, it won't seem so bad. The worse possibility is that they're aware of more information than the rest of us have, and that things really are heading south in this "Rebound? What Rebound?" recovery.
Here are key paragraphs of Zibel's report (link is probably dynamic and subject to revision; bolds are mine):
The establishment press is either getting tired of being beaten up over using the U-word ("unexpectedly," or sometimes "unexpected") to the point of excess when economic news disappoints, or has itself wearied of using the word.
Retail sales plunged in May by the largest amount in eight months as consumers slashed spending on everything from cars to clothing. The big drop raises new worries about the durability of the economic recovery.
The comparison of the results contained in the April 2010 Monthly Treasury Statement released this afternoon to April of last year is bad enough. But if the American people knew that April 2010 came in about a quarter-trillion dollars worse than both 2007 and 2008 with almost 40% less in tax collections, most of them would be appalled. Many more than are already doing so would be questioning what in the heck this administration and Congress are up to.
That's why you probably won't see establishment media outlets like the Associated Press go back more than one year in their detailed comparisons, even though during the presidency of George W. Bush, writers like the AP's Martin Crutsinger and others frequently went back to fiscal 2000 and 2001 to remind readers of the surpluses that occurred during those fiscal years. The intent, of course, was to imply that things were just peachy keen under Bill Clinton until the eeeeevil Bush ruined everything. As noted later, that ain't so.
Here is the AP's Crutsinger on today's Treasury Statement, blissfully pretending, with the exception of one cryptic reference, that the two high-collection Bush years neeeeeeeever happened: